Volume 3, No. 5, May 2002

It is now a routine exercise each year. This year’s budget, as those in previous years, robs the poor and middle classes, pampers the rich, and opens up the country to further multinational loot. Over the past decade of ‘economic reforms’, this has been a common thread of all budgets, whether by the Congress (I) or the UF (inclusive of the so-called ‘Left’) or the present BJP-led NDA. The only additions in the BJP budgets, including the present one, is, that it has accelerated all the above factors pushing them to extremes; they have also enormously hiked defense spending in pursuance of its expansionist and militarist policies; and has diverted funds to its Hindutva agenda.

Over the past decade, each budget was geared to extracting the maximum from the poor — reducing an already impoverished mass to inhuman levels of existence. Now, with little left to extract from this section any more, in this particular budget of 2002-03,it has launched a massive attack on the middle classes, extracting roughly Rs.15, 000 crores from them. But, it has also not spared the poor, by introducing such measures as raising the price of kerosene by as much as Rs.1.4 per litre. The amount extracted from the masses is the highest in the past decade of budgets. The BJP’s call for a rollback on some items at its Goa conclave is nothing more than publicity stunt, as it barely touches on the major levies.

In spite of the disastrous impact of these new levies on the lives of the people, most of the media and the parliamentary parties were silent. Conveniently, this year’s budget proposals, has been drowned in the Hindutva hungama. While the budget was presented on Feb.28, that entire month went in the Ayodhya semantics, with the media talking of nothing else. Just a day before the budget was the Godhra event followed by over a month of state-sponsored communal carnage in Gujarat. The budget was forgotten, while all parties sought to make political capital out of the communal holocaust. At Sonia’s Chief Minister’s conclave in Guwahati, not a word was mentioned on the budget, though it was still to be passed. It is a conspiracy of silence, wherein all the parliamentary trash is party to the conspiracy, each trying to prove their greater servility to the TNCs and imperialists. One has merely to look at the policies of the Chief Ministers of all States, no matter which party is in power, to understand the extent of this servility.

What then are the main aspects of the current budget? Besides a massive dose of taxation and huge allocations for defense, a key aspect is the introduction of numerous policies that pushes the economy deeper and deeper into the arms of the imperialist Octopus. Policies, which deeply impact on the country’s sovereignty, are being passed, without so much as a whimper. Let us first take a look at these:

Why the silence when, through this budget process, rapid measures are taken to hand over, not only industry, not only finance, not only trade, but also our very currency into the hands of the imperialists and the TNCs?

Even though opening out the currencies of various countries proved disastrous during the 1997 S.E.Asian crisis, and then again more recently in Turkey and Argentina, this budget has gone a long way on making the rupee convertible on capital account (which means we can exchange rupees for dollars over the counter at any bank)— throwing it open to the vagaries of the international markets. The current budget has taken two major steps in this direction:

First, it announced the full convertibility of all deposit schemes of NRI’s (Non-Resident Indians) in India. In other words the huge NRI deposits, amounting to roughly $8 billion (Rs40, 000 crores), has been made part of India’s external debt — where interest and repayment charges will now have to be paid in dollars. Not only that, the budget has also permitted NRIs to freely repatriate current earnings in India, such as rent, dividend, interest, etc. in foreign exchange.

Second, FIIs (Foreign Institutional Investors — or hot money) has been given free play to take over Indian private banks. The sectoral cap of 24% in FII’s portfolio investment in private banking has been removed allowing even 100% foreign equity in Indian private banks. In addition, FIIs have also been allowed easier access to Indian companies, and to indulge in derivatives trading on the Indian stock market.

These are nothing but two major steps towards making the rupee convertible on capital account. This will have serious implications for India’s currency security, whenever the international financial speculators decide to attack the currency, or withdraw their vast funds parked here.

Besides this major opening up to the imperialists, the budget has introduced a host of new measures that further facilitates TNC operations in this country and helps extend the markets for their products.

In the sphere of trade, both imports and exports, have been given massive concessions. The concessions for imports allows for a flood of foreign goods, which has a disastrous impact on indigenous production. The export concessions allow the imperialists to rob our goods cheap due to the unfavourable terms of trade. With the continued devaluation of the rupee Indian goods get sold at throwaway prices in dollar-terms. The following measures were introduced in the budget and the new EXIM policy:

· Basic customs duty has been reduced by a further 5% giving an Rs.2, 200 crore bonanza to foreign exporters.

· Excise duty has been reduced on foreign liquors, cosmetics, helicopters, yachts, and other luxury items, most of which are imported.

· The new EXIM policy has:

1) removed all Qualitative Restrictions on exports, including those on agricultural commodities

2) created 20 new Agri-Export Zones for promoting agri-exports. 20 AEZs have been identified in 15 states for promoting horticultural products. These will be set up by government investments and credit facilities and will be through collaborative efforts of the state govt., the center and enterpreneurs.

3) Transport assistance will be given for export of fruits, vegetables, floriculture, poultry, dairy products, and products of wheat and rice.

Other Gains for the TNCs and their comprador collaborators:

· Corporate tax on foreign companies operating in India has been reduced by as much as 8%, from 48% to 40%.

· Tax benefits given to telecom companies.

· By dismantling the Administered Price Mechanism for petroleum products the budget has opened the door wide to the giant oil multinationals like Shell, Caltex, Exxon, etc, which have already been making big inroads into the country.

· With the further removal of 50 items from the reserved list of small-scale industries, large sectors of the economy have been pried open for TNC/comprador take-over.

· Major privatization plans of profit-making public sector units, like VSNL and India’s ports — most of which are likely to be sold in strategic sales to foreign partners.

· Removal of 34 bulk drugs from the list of 74 whose prices are subject to control, thereby allowing further windfall profits to the pharmaceutical sector.

· Cabinet approval to 100% FDI in films and advertising through the automatic approval route.

· Planned 100% FDI in retailing to open out India’s gigantic retailing business of $180 billion (nearly equal to that of US’s biggest company — Wal Mart — which also happens to be a retailing company) to foreign capital.

· A new Auto policy has thrown open the automobile sector to 100% FDI and done away with the minimum capital investment norm for fresh investments. The policy has also come out in favour of providing excise duty concessions to small cars, multiutility vehicles, to make them WTO compatible.

· Agribusiness is to be given a big boost in the country with plans to do away with government procurement. With the proposed amendment to the Agricultural Produce Marketing Act, farmers will be allowed to sell their produce directly to the food producers, making them even more susceptible to the vagaries of the market. Besides, big TNC conglomerates are poised to take over from the FCI.

· Opening out the dairy sector to TNCs by the plan to scrap the Milk and Milk Products Order, 1992. This Order protects existing milksheds of the vast cooperative sector in milk processing. Already dairy TNC giants, like Nestles, Dynamix, etc. have made big inroads into the country. Now, they will only be given a freer hand to either swallow up existing cooperatives or else seize their milksheds from them.

Such then has been the massive sell-out of the country’s interests to the imperialists, yet all the ‘national interest’ spouting parties are silent. Even the so-called parliamentary left, which makes big pretenses of fighting the economic reforms, will merely undertake their traditional walkout in parliament and do little else. The others too may make some noise, in a pretense of opposition.

Besides this important aspect of sell-out to the imperialists, the budget has serious implications for the middle classes.

An ordinary middle class person will be paying an extra 3% (now 5%) surcharge on his income tax for the supposed security of the country; 10% extra on his dividend income; and an increase in service tax on his life insurance.

Besides this, he will be getting 0.5% less interest on his Provident Fund and other small savings (in future, the reduced 9% rate will drop even lower as the budget has decided to link this interest rate to that of govt. securities, which is today 7.24%), and his tax rebate on investments will be reduced by 10%. In addition he will be paying higher postal charges and rail fares; and also Rs.40 per cylinder extra for cooking gas and Rs.1.4 per litre extra for kerosene. In addition to all this the farmer will be paying extra for fertilizers due to a 5% reduction in the subsidy rate. In total the government will be extracting a massive Rs.15, 000 crores from the masses.

On the other hand, the government has continued with the Rs.17, 000 crore gifts to big business announced in the last budget; and to this has been added a further gift of Rs.2,200 crores in cuts in customs duty and a Rs.1, 300 crores gift, by abolishing distribution tax.

In other words, it has extracted Rs.15, 000 crores from the masses to give away Rs.20, 500 crores to big business.

Besides, much of the increased expenditure is going on defense to further the ruler’s expansionist goals in the region, and to use as firepower against people’s discontent and the on-going nationality movements.

It has raised defense expenditure by yet another 14% from Rs.57, 000 crores to a massive Rs.65, 000 crores. In addition there has been a phenomenal increase of 23% in defense research taking the budgeted expenditure on this for 2002-03 to Rs.9, 813 crores. So, if we consider the other hidden expenditure on defense (such as pension to ex-defense personnel, defense intelligence, etc), the total defense budget comes to over Rs.80, 000 crores. Money extracted from the masses, to buy guns to butcher them and their neighbours in other countries!!

The budget is nothing but a continuation of the second-generation reforms being dictated by the imperialists. The servile compradors, whose interests are inseparably tied to those of the imperialists, blindly sign on the dotted line. These stooges are nothing but agents of international finance capital, out to destroy the people of this country, in order to serve foreign interests. They are traitors, collaborators and criminals of the worst type who must be tried and sentenced in people’s courts.

These economic reforms can only be reversed by breaking free of the imperialist chain, through building an economy based on self-reliance. Globalisation’s impact on India cannot be reformed by giving it a human face, as proposed by many a liberal. Neither can it be reversed to the old parasitical public sector regime as proposed by the revisionist CPI & CPM. Globalisation entails the brutal offence of finance capital, which cannot be humane. The answer to these economic reforms lies only in a militant anti-imperialist movement that will kick the imperialists out of the country and crush their local comprador agents that live off their crumbs.

April 15, 2002

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